In version 3, haircut styles remain unchanged and instead alters the facial features. Version 1 gives both male and female characters realistic hair, while Version 2 only gives female characters new hair.
The difference between them is the way they handle hair. Inhabitants of Skyrim - NPC Overhaul comes in three different versions. These updates can be applied to most of the characters, except minor ones like miners. It also adds more realistic haircut styles.
As stated in the official documentation, this mod aims to make game characters 'prettier.' The process involves adjusting the positions of facial features, removing wrinkles, and removing dirt from textures.